(By Delegates Amores, Warner, Coleman and Hunt)
[Introduced January 14, 1998; referred to the
Committee on Government Organization then Finance.]

A BILL to amend chapter thirty-three of the code of West
Virginia, one thousand nine hundred thirty-one, as amended,
by adding thereto a new article, designated article
forty-one, relating to adoption of a 'Patient Protection
Act'; assuring fairness and choice to patients and providers
under managed health care benefit plans; short title;
purpose; definitions; protection of consumer choice;
certification and review of managed care plans and
utilization review programs; health care provider
credentialing requirements; application of standards; choice
requirement for point-of-service plans; premiums; fees;
disclosure; choice of health plans for enrollment; and
proposal of rules.

Be it enacted by the Legislature of West Virginia:
That chapter thirty-three of the code of West Virginia, one
thousand nine hundred thirty-one, as amended, be amended by
adding thereto a new article, designated article forty-one, to
read as follows:ARTICLE 41. PATIENT PROTECTION ACT.
§33-41-1. Short title.
This article shall be known and may be cited as "The Patient
Protection Act."§33-41-2. Purpose.
The Legislature hereby finds and declares that:
(a)
As this state's health care market becomes increasingly
dominated by health plans that utilize various managed care
techniques that include decisions regarding coverage and the
appropriateness of health care, it is a vital state governmental
interest to protect patients from unfair managed care practices;
(b)This article requires the commissioner of the department
of tax and revenue's division of insurance to establish standards
for the certification of qualified managed care plans and
qualified utilization review programs. These standards are
necessary to ensure patient protection, to avoid discrimination
against qualified health care providers, to establish safeguards for utilization review practices and to develop more and better
coverage options for all eligible enrollees, including the option
to enroll in a point-of-service plan. To enhance patients'
choices of health care providers, this article mandates the
availability of a point-of-service option for those enrollees who
desire this coverage option.§33-41-3. Definitions.
For purposes of this article:
(a)"Benefit payment schedule plan" means a health plan
that:
(1) Provides coverage for all items and services included in
the standard benefit package, which items and services are
furnished by any lawful health care provider of the enrollee's
choice, subject to state licensing requirements;
(2) Makes payment for the services of a provider on a
fee-for-service basis without regard to whether or not there is
a contractual arrangement between the plan and the provider; and
(3) Provides a benefit payment schedule that identifies
covered services and the payment provided for each service
covered by the plan. No copayments or coinsurance shall be
applied. The plan shall reimburse the payment for services to
the enrollee unless the enrollee authorizes direct payment to the provider.
(b) "Commissioner" means the insurance commissioner of West
Virginia.
(c) "Emergency services" means those health care services
that are provided in a hospital emergency facility after the
sudden onset of a medical condition that manifests itself by
symptoms of sufficient severity, including severe pain, that the
absence of immediate medical attention could reasonably be
expected by a prudent layperson who possesses an average
knowledge of health and medicine, to result in:
(1) Placing the patient's health in serious jeopardy;
(2) Serious impairment to bodily functions; or
(3) Serious disfunction of any body organ or part.
(d) "Health care provider" means any person, organization or
entity, including but not limited to hospitals, pharmacies, and
laboratories, or any other appropriately state-licensed or
otherwise state-recognized provider of health care services or
supplies.
(e) "Health care provided incentive plan" means any
compensation arrangement between the plan and a health care
provider that may directly or indirectly have the effect of
reducing or limiting services provided with respect to an individual or individuals enrolled in the plan.
(f) "Health maintenance organization" or "HMO" means a
public or private organization which provides, or otherwise makes
available to enrollees, health care services that include, at a
minimum, basic health care services.
(g) "Managed care contractor" means a person that:
(1)Establishes, operates or maintains a network of
participating providers;
(2)Conducts or arranges for utilization review activities;
or
(3)Contracts with an insurance company, a hospital or
medical service plan, an employer, an employee organization or
any other entity providing coverage for health care services to
operate a managed care plan.
(h) "Managed care entity" means a licensed insurance
company, hospital or medical service plan, health maintenance
organization, an employer or employee organization or a managed
care contractor, as defined in subsection (d) of this section,
that operates a managed care plan.
(i) "Managed care plan" means a restrictive health care plan
operated by a managed care entity, as defined in subsection (e)
of this section, that provides for the financing and delivery of health care services to persons enrolled in such plan through:
(1) Arrangements with selected providers to furnish health
care services;
(2) Explicit standards for the selection of participating
providers;
(3) Organizational arrangements for ongoing quality
assurance, utilization review programs and dispute resolution;
and
(4) Financial incentives for persons enrolled in the plan to
use the participating providers and procedures provided for by
the plan: Provided, That for purposes of this article, a managed
care plan does not include an integrated medical group
contracting with a plan for the direct provision of services to
plan enrollees.
(j) "Medical savings account" means a trust used for the
payment of medical expenses which is created or organized for the
exclusive benefit of an individual, his or her dependents covered
under a group accident and sickness policy, and his or her
beneficiaries, and as more fully defined in section fifteen,
article sixteen, chapter thirty-three of this code.
(k) An "out-of-network" or "point-of-service" plan is a plan
that: (i) Provides additional coverage and access to care by nonnetwork providers to an eligible enrollee of a health plan
which otherwise restricts access to and coverage for items and
services that are provided by a health care provider who is not
a member of the plan's provider network; or (ii) may cover any
other services the enrollee seeks, whether the services are
provided in or outside of the enrollee's plan.
(l) "Participating provider" means any health care provider
as defined in subsection (d) of this section that has entered
into an agreement with a managed care entity to provide health
care services or supplies to a patient enrolled in a managed
care plan.
(m) "Preferred provider organization" or "PPO" means an
alternative health care delivery system, created by contract
between health care providers and third-parties such as employers
or third-party administrators, under which the PPO agrees to
provide health care services to a defined population of enrollees
in return for payment based on a negotiated schedule of fixed
fees. A PPO is distinguished from an HMO or similar organization
in that: (i) PPO providers are paid on a fee-for-service basis
while other systems pay by capitation or salary; and (ii) PPO
physicians are not at financial risk for services not provided
while, with HMO's and similar organizations, the organization, as purchaser of the service, retains the risk of loss.
(n) "Provider network" means, with respect to a health plan
that restricts access, those providers who have entered into a
contract or agreement with the plan under which the providers are
obligated to provide items and services in the standard benefits
package to eligible individuals enrolled in the plan, or who have
an agreement to provide services on a fee-for-service basis.
(o) "Qualified managed care plan" means a managed care plan
that the commissioner certifies, upon application by the plan, as
meeting the requirements of this article.
(p) "Qualified utilization review program" means a
utilization review program that the commissioner certifies, upon
application by the program, as meeting the requirements of this
article.
(q) "Specialty" means any medical specialty as recognized by
the American board of medical specialties or the American
osteopathic association.
(r) "Traditional insurance plan" includes those plans that
offer the standard benefits package which pays for medical
services on a fee-for-service basis using: (i) A usual,
customary or reasonable payment methodology; or (ii) a resource
based relative value schedule, and which is usually linked to an annual deductible or coinsurance payment on each allowed amount.
(s) "Utilization review program" means a system for
reviewing the medical necessity, appropriateness or quality of
health care services and supplies provided under a health
insurance plan or a managed care plan using specified guidelines.
Such a system may include preadmission certification, the
application of practice guidelines, continued-stay review,
discharge planning, preauthorization of ambulatory procedures and
retrospective review.§33-41-4. Protection of consumer choice.
Nothing in this article may be construed as prohibiting:
(a)An individual from purchasing any health care services
with that individual's own funds, whether those services are
covered within the individual's standard benefit package or from
another health care provider or plan; or
(b)An employer from providing coverage for benefits in
addition to the comprehensive benefit package.

(a) The commissioner shall establish a process for
certification of managed care plans and utilization review
programs. The commissioner shall also establish procedures for the periodic review and recertification of qualified managed care
plans and qualified utilization review programs. Periodic review
and recertification shall include those managed care plans and
utilization review programs which exist prior to the effective
date of this article.
(b)The commissioner shall terminate the certification of a
previously qualified managed care plan or a qualified utilization
review program if the commissioner determines that such plan or
program no longer meets the applicable requirements for
certification. Before effecting a termination, the commissioner
shall provide the plan notice and opportunity for a hearing on
the proposed termination pursuant to the provisions of article
five, chapter twenty-nine-a of this code.
(c)An eligible organization, as defined in Title 42 U.S.C.
Section 1395mm, shall be deemed to meet the requirements of this
article for certification as a qualified managed care plan.
(d)If the commissioner finds that a national accrediting
body establishes or has established a requirement or requirements
for accreditation of a managed care plan or utilization review
program that is or are at least equivalent to the requirements of
this article, the commissioner may deem such a managed care plan
or utilization review program thus accredited as meeting the certification requirements of this article.

§33-41-6. Certification requirements for managed care plans.

(a)The commissioner shall establish standards for the
certification of qualified managed care plans that conduct
business in this state, which standards shall incorporate the
following requirements:
(1)Prospective enrollees in health insurance plans shall be
provided information as to the terms and conditions of the plan
so that they can make informed decisions about accepting a
certain system of health care delivery. This information must be
provided in a clear and concise format that explicitly details
any limitations in choice of primary health care providers access
to specialists and also describes the method of health care
provider payment. Whenever the plan is described orally to
enrollees, terms used shall be easily understood, truthful and
objective. Further, all plans shall provide written descriptions
in a readable and understandable format, consistent with
standards developed for supplemental insurance coverage under
Title XVIII of the Social Security Act. This format shall be
standardized so that customers can compare the attributes of
different plans. All plans shall specifically include the
following:
(A)Coverage provisions, benefits and any exclusions by
category of service, provider or physician and, if applicable, by
specific service;
(B)
Any and all prior authorization or other review
requirements including preauthorization review, concurrent
review, postservice review, postpayment review and any procedures
that may lead the patient to be denied coverage for or not be
provided a particular service;
(C)
Financial arrangements or contractual provisions with
hospitals, review companies, physicians or any other provider of
health care services that would limit the services offered,
restrict referral or treatment options or negatively affect the
physician's fiduciary responsibility to his or her patients,
including, but not limited to, financial incentives not to
provide medical or other services;
(D) Explanation of how plan determinations of whether a
service or item is covered including policy regarding new and
emerging technology.
(E)Explanation of how plan limitations impact enrollees,
including information on enrollee financial responsibility for
payment for coinsurance or other noncovered or out-of-plan
services;
(F)Medical benefit/loss ratios and an explanation that they
reflect the percentage of premiums expended for health care
services; and
(G)Enrollee satisfaction statistics, including percent
reenrollment, reasons for leaving plan, and other such data.
(2) Any limitations or conditions placed by a plan upon the
frequency or duration of treatment for a particular diagnosis
shall be applied equally to all types of participating providers.
(3)Plans shall demonstrate that they have adequate access
to physicians and other providers so that all covered health care
services will be provided in a timely fashion by establishing
standards, such as physician/patient ratios, to insure an
enrollee's reasonable access to primary care physicians,
specialty care and needed services of other providers. This
requirement cannot be waived and shall be met in all geographical
areas where the plan has enrollees, including rural areas.
(4)Plans shall meet financial reserve requirements
established by the commissioner to insure proper payment for
covered services. Stop-loss or reimbursement coverage shall be
established to provide for planned failures even when a plan has
met the reserve requirements.
(5)All plans shall establish a mechanism, with defined rights, under which participating providers in the plan provide
input into the plan's medical policy, including coverage of new
technology and procedures, utilization review criteria and
procedures, quality and credentialing criteria, and medical
management procedures.
(6)All plans shall be required to credential participating
providers within the plan pursuant to the provisions of section
seven of this article. All plans shall permit all physicians
residing or practicing within the plan's geographic service area
to apply for plan credentials and, at a minimum of one time per
annum, shall notify physicians of the opportunity to apply for
these credentials.
(7) To avoid discriminating against enrollees with expensive
medical conditions, plans may not exclude a practitioner solely
because his or her practice contains a substantial number of
patients.
(8) Plans may not include terms or clauses in contracts with
health care providers that permit the plan to terminate the
contract "without cause."
(9) Plans may not prohibit or restrict any health care
provider from disclosing to any subscriber, enrollee or member
any medically appropriate health care information that the medical provider deems appropriate regarding the nature of
treatment, risks or alternatives thereto, the availability of
alternate therapies, consultation or test, the decision of any
plan to authorize or deny the services or the process the plan of
any person contracting with the plan uses, or proposed use, to
authorize or deny health care service benefits. Any prohibition
or restriction contained in a contract with a health care
provider is contrary to public policy and is void and
unenforceable.
(b) Each plan shall establish and demonstrate to the
commissioner procedures to ensure that all applicable federal and
state laws enacted to protect the confidentiality of provider and
individual medical records are followed.
(c) Any plan that operates a health care provider incentive
plan shall meet the following requirements:
(1) No specific payment may be made directly or indirectly
under the plan to a health care provider group as an inducement
to reduce or limit medically necessary services provided to an
individual patient; and
(2) If the plan places a health care provider at financial
risk for services not provided by the health care provider, the
plan shall provide stop-loss protection for the health care provider that is adequate and appropriate, based on standards
developed by the commissioner, that take into account the number
of health care providers placed at such financial risk in the
group or under the plan and the number of individuals enrolled
with the organization who receive services from the health care
provider.

§33-41-7. Health care provider credentialing.

(a) Each managed care plan shall establish a credentialing
process for all health care providers applying for participation
in the plan. A credentialing process shall begin upon the receipt
of the application of a physician for inclusion in the plan.
Each application shall be reviewed by a credentialing committee,
composition of which includes appropriate representation of each
applicant's particular professional licensure.
(b) Credentialing shall be based upon objective standards of
quality, developed in consultation with health care providers
credentialed in the plan that include education, training,
background, experience, professional disposition and demonstrated
competence. The standards shall be made available to applicants
and enrollees. When economic considerations are germane to a
credentialing decision, objective criteria shall be used and
shall be made available to applicants, participating health care providers and enrollees. Any economic profiling of health care
providers shall be adjusted to recognize case mix, severity of
illness, age of patients and other features of a health care
provider's practice that may account for costs that are higher
than or lower than expected. Profiles shall be made available
to those so profiled.
(c) All decisions regarding physician credentialing by a
plan shall be made in writing and made a part of the applicant's
record. The applicant shall be provided a written statement of
all reasons for denial of an application or nonrenewal of a
contract.
(d) Applicants for credentialing shall be entitled to a due
process appeal from all adverse decisions. The commissioner
shall establish procedures for due process appeals from adverse
credentialing decisions pursuant to the provisions of article
five, chapter twenty-nine-a of this code.
(e) The same standards and procedures that a plan uses for
approving an initial application for plan credentials shall also
be used in those cases where the plan seeks to reduce or withdraw
the credentials. Before a plan initiates a proceeding that may
lead to the termination of a contract "for cause," the plan must
notify the physician in writing and provide an opportunity to discuss the reasons for the termination and an opportunity to
propose, enter into, and complete a corrective action plan,
except in cases where there is a threat of imminent harm to
patient health or a state medical board or other governmental
agency has taken some action that limits or restricts the
physician's ability to lawfully practice medicine within the
jurisdiction.

§33-41-8. Certification requirements for utilization review
programs.

(a) The commissioner shall establish standards for the
certification of qualified utilization review programs.
(b) All utilization review program plans shall have a medical
director who shall be responsible for all clinical decisions by
the plan and who shall provide assurances to the commissioner
that the medical review or utilization practices used by the plan
and the payors or reviewers with whom the plan contracts comply
with the following requirements:
(1) Screening criteria, weighing elements and computer
algorithms utilized in the review process and their method of
development. The criteria shall be based on sound scientific
principles and developed in consultation with practicing
physicians and other affected health care providers. The criteria shall be released upon request to enrollees and
participating health care providers;
(2) Any person who recommends denial of coverage or denial
of payment, or who determines that, based on medical necessity
standards, a service should not be provided, shall be of the same
particular professional licensure as the practitioner who
prescribed or provided the service;
(3) Each claimant or provider, upon assignment of a claimant,
who has a claim denied as not medically necessary must be
provided with a written statement of reasons for the decision,
which must be clearly documented in the permanent case record,
whether that record is automated or manual. This written
determination letter shall include a general description of the
reason the service was denied, an explanation of both the
claimant's and the provider's appeal rights and instructions to
appeal the determination to the plan's utilization review
director, medical director, physician peer review committee or
other appropriate person or entity as designated by the plan in
conjunction with any other physician or provider group charged
with oversight of the plan's utilization review program;
(4) Any individual who makes a determination or a
recommendation that a certain service or site of service is medically unnecessary or inappropriate shall be a physician
licensed to practice medicine in this state;
(5) A representative of the private review agent shall be
reasonably accessible to patients, patients' families, and
providers at least five days per week during normal business
hours. Payment may not be denied for treatment rendered during
a period when the review agent was not available;
(6) No private review agent may enter a hospital to interview
a patient unless approved in advance by the patient's attending
physician. The attending physician or a designee shall be
entitled to attend the interview;
(7) No contract between a private review agent and a third
party payor may contain a provision that incorporates an
incentive for the reviewer to reduce the availability or
affordability of health care services by making payment to the
private review agent contingent in any way upon a reduction in
the approval of health care services, reduction in length of
stay, reduction of treatment or selection of the treatment
setting;
(8) Utilization review of treatment for all illnesses shall
be nondiscriminatory and without regard to whether an illness is
classified as medical/physical or mental;
(9) Upon request and subject to reasonable safeguards and
standards, physicians shall be provided the names and credentials
of all individuals conducting medical necessity or
appropriateness reviews;
(10) Prior authorization may not be required for treatment
of an emergency medical condition, as defined in Title 42 U.S.C.
Section 1395dd, including medical screening exams and stabilizing
treatment. Any requirement for prior authorization of medically
necessary services arising from such screening exams or
stabilizing treatment shall be deemed to be approved unless the
reviewing agent responds otherwise within two hours of receiving
a required request for prior authorization. Requests by patients
or physicians for prior authorization of any nonemergency service
shall be answered within two business days. Qualified personnel
shall be available for same-day telephone responses to inquiries
about medical necessity, including certification of continued
length of stay;
(11) In plans where prior authorization is a condition to
coverage of a service, plans shall ensure that enrollees are
required to sign medical information release consent forms upon
enrollment for use where services requiring prior authorization
are recommended or proposed by their physician;
(12) When prior authorization for a service or other covered
item is obtained, it shall be deemed authorization for all
purposes reasonably related to that service or covered item and
the service shall be considered to be covered unless such prior
authorization was obtained through fraud or the submission of
false information; and
(13) Procedures shall be established for ensuring that all
applicable federal and state laws designed to protect the
confidentiality of provider and individual medical records are
followed.

§33-41-9. Application of standards.

(a) All standards required by this article shall be
established by the commissioner no later than twelve months after
the effective date of this article.
(b) In developing standards required by this article, the
commissioner shall:
(1) Review standards in use by national private accreditation
organizations and the national association of insurance
commissioners;
(2) Recognize, to the extent appropriate, differences in the
organizational structure and operation of managed care plans; and
(3) Establish procedures for the timely consideration of applications for certification by managed care plans and
utilization review programs.
(c) The commissioner shall periodically review the standards
established under this article and may revise the standards from
time to time to assure that they continue to reflect appropriate
policies and practices for the cost-effective and medically
appropriate use of services within managed care plans and
utilization review programs.

§33-41-10. Choice requirement for point of service plans;
premiums; fees; disclosure.

(a) Each sponsor of a health benefit plan that restricts
access to providers, including plans that are provided, offered
or made available by voluntary health purchasing cooperatives,
employers and self-insurers, shall offer to all eligible
enrollees at the time of enrollment and at least for a continuous
one-month period annually thereafter the opportunity to obtain
coverage for out-of-network services through a point-of-service
plan;
(b) A plan may charge an enrollee who opts to obtain
point-of-service coverage an alternative premium that takes
into account the actuarial value of the coverage;
(c) A point-of-service plan may require payment of coinsurance for an out-of-network item or service with the
applicable coinsurance percentage not being greater than the
percentage of coinsurance payment provided for under the plan.
(d) All sponsors of point-of-service plans and participating
provider in those plans shall be required to disclose their fees,
applicable payment schedules, coinsurance requirements or any
other financial requirements that affect patient payment levels.§33-41-11. Choice of health plans for enrollment.
(a) Each sponsor of a health benefit plan, including
voluntary health insurance purchasing cooperatives, employers and
self-insurers, who offers, provides or makes available the
benefit plan, shall provide to each eligible enrollee a choice of
health plans among available plans.
(b) Each voluntary health insurance purchasing cooperative,
employer or other sponsor shall include among its health plan
offerings at least one of each of the following types of health
benefit plans, where available:
(1) A health maintenance organization (HMO) or preferred
provider organization (PPO);
(2) A traditional insurance plan;
(3) A benefit payment schedule plan; and
(4) Medical savings accounts.

§33-41-12. Proposal of rules.

The commissioner shall propose legislative rules pursuant to
the provisions of article three, chapter twenty-nine-a of this
code as may be necessary to effectuate the requirements of this
article.

NOTE: The purpose of this bill is to create a patient
protection act for enrollees of managed health care plans. It
requires the insurance commissioner to propose rules that would
establish certain standards to ensure patient protection,
physician credentialing, utilization review safeguards and
coverage options, including point-of-service plans.

This article is new; therefore, strike-throughs and
underscoring have been omitted.